Project

Report

On

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SUBMITED BY :

SUBMITED TO :

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ACKNOWLEDGEMENT

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INDEX

1) Introduction about the company 5

2) Mission statement of BA 5 3) Customers 6

4) Responsibilities of an organization 7

5) Management tool 9

6) Social welfare and industrial policy 10

7) Macro economics 11

8) Planned economic system 15

9) Supply and demand curve 17

10) Competition Commission and regulatory bodies 21

11) Regulatory environment implication 22

12) Business implication 23

13) Policies 26

14) Economic implications 27

15) Conclusion 28

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Introduction about the company

IN the last 10 years, British Airways has proven itself to be one of the UK's success stories in privatization. The re-launch of BA in the 1980s as "the world's favourite airline" is the stuff that advertising courses are made of, while BA's process re-engineering, introducing best practices in customer care, fill pages in marketing textbooks and the Harvard Business Review. BA's rejuvenation from being an unhealthy airline to a world-class enterprise has been already well documented. On June 10, 1997, BA introduced a new dimension. Instead of standing still, a new corporate identity was launched, heralding a £6 billion improvement programme and a new strategic direction.

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Mission statement

A mission statement is a statement of the purpose of a company or organization. The mission statement should guide the actions of the organization, spell out its overall goal, provide a path, and guide decision-making

According to Bart (1997), the commercial mission statement consists of 3 essential components:

1. Key market – who is your target client/customer? (generalize if needed)2. Contribution – what product or service do you provide to that client?3. Distinction – what makes your product or service unique, so that the client

would choose you?

Mission statement of BA

BA has shown that redefining the vision, and making sure it is successfully carried out throughout the organization, are keys to corporate success. British Airways has leapt forward again, now defining its target as being the 'undisputed leader in world travel'. This mission is, of course, wider than being merely an airline with good customer relations and service. 'British Airways is aiming to set new industry standards in customer service and innovation, deliver the best financial performance and evolve from being an airline to a world travel business with the flexibility to stretch its brand in new business areas.'

Vision statement

A vision statement is sometimes called a picture of your company in the future but it’s so much more than that. Your vision statement is your inspiration, the framework for all your strategic planning.

Vision statement of BA

British Airways are constantly working towards creating an inclusive culture that understands and respects the individual differences of our employees. Employing a mix of people from diverse

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(1b) Evaluate the extent to which an organization achieves the objectives of three stakeholders.

The organisation achieves objective from three stakeholders;

1) customers

2) employees

3) shareholders

Customers: BA has offered long haul and short haul for the customers . the short haul is basically used for domestic flights and a for short distance trip , but to ensure that the customers are having a pleasant and comfortable journey they have introduced club Europe which is a business class which will fly in Europe and the long haul will be first class with folding beds .BA is doing many things to make the customers happy and they have asked for feedback from the customers to what they feel about BA .

Employees: the employees have to serve the customers , so they have to maintain a decent relationship among the employees and customers . BA has given their staff opportunities for training and also have organized many programs for them

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to be good in communication which will be in use to innovate and expand BA customers.

Shareholders : the share of the company are high , this is because the loyalty offered to the customers . BA has 15% stake in Europe airlines Flybe from the time for sale of British Airways , they also own 10% stake in InterCapital and Regional Rail (ICRR) this company operated and managed the operations of Eurostar (UK) from 1998 to 2010 .

(1c) Explain the responsibilities of an organization and strategies employed to meet them.

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marketplacethe marketplace responds to the

customers demand whenever made .we also

ensure that the corporate responsibilities

principles are adopted throughout the

customers . the diversity team keeps attention on the customers regarding

needs and mobility issues

communityThe strategy focuses on

delivering financial support in UK and many other countries

that they serve .BA also focuses on education programmes and community

projects

workplaceBritish airways follows corporate

responsiblities throughout the organisation . They also provide training and work to eradicate

unacceptable behaviours.

environmentthey focus on assessing and

minimising the impact on the business of the

environmentThe keys ares of focus

is on air quality , aircrafts noise and

waste management

Responsibilities of BA

Q2. Using PESTEL and any management tool you are familiar with evaluate the

impact of macro economic policy measures and the influence of the global

economy on British airways and its stakeholders.

2a) Explain how Economic Systems attempt to allocate and make effective use of

resources.

1) Traditional economy : it is a family or community based economy , it

completly relies on customs and rituals to make its choice

For example :- amazon tribe and aboriginies

2) Market economy :this economy is individualnor consumer based economic

that is based and relied on the consumption choice of consumer

For example :- USA , Japan and any capitalist economy

3) Command economy : this economy is centrally controlled and decisions are

made by the government

For example :-Cuba, China

4) Mixed economy : economy system that incorporates some governmental

involvement into a markeet based economy

For example :- USA, India and modern economies

Conclusion - A mixed economy is usually adopted by government to

promote free enterprises while some degree of intervention with the

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objective of effective allocation of resources within country. Singapore is

such an example of a mixed economy that has brought about the

privatization of SingTel from a government department to be a public listed

company

(2b) Discuss the impact of social welfare and industrial policy initiatives on

organizations and the wider community.

Social welfare

Environment

All airlines have to meet a comprehensive range of local, national and international environmental regulations.BA takes care of the environment in many ways which will not harm the environment and the customers should be satisfied . For example, our target to halve our 2005 net CO2 emissions by 2050 leads the industry in commitment to reducing our carbon emissions.

Safety and security

Safety and security are key priorities for us. We have a formal safety management system in place to ensure that we comply with all relevant regulations. We operate a comprehensive monitoring system to ensure all incidents are reported and necessary action taken. From the start of 2009, all IATA member airlines have been required to pass an International Operational Safety Audit (IOSA). We have held IOSA accreditation since October 2007.

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Industrial policy

Environmental factors

BA is leading the firm and also taking care of the environment . the managers are doing their job as well as to protect the environment aspect , they have to take care of the noise which is told would be reduced by 15% in 2015 , BA also have to look at the climate changes which will affect the environment due to CO2. The waste of BA also is in control as compared to last 5 years .

Health factors

The safety and health factors are taken care by the british airways. They also have their doctors on board if they find any person sick,is treated with medicies . they also have spent 100 millions on the security of the customers .BA is one of the top listed airlines which wants to fuilfill the wants of the customers and would serve them whenever recquired .

(2c) Evaluate the impact of macro economic policy measures and the influence of

the global economy on UK-based organizations and stakeholders.

PESTLE

Political

Airlines have to work within some

operating restrictions . the

benefits of a joint alliance is that

the industry will be approach an

Economic

The economic factor of BA are in critical state 1)global and ecomomic crises world growth is projected to just over 2% in 2009 , this caused pound weakness against euro

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unapproach route. The airline

industry get two agreements

which is also another political

benefit .

2)oil prices declined by 50% and fuel price strenghting of the dollar (IMF, 2009)

3)UK consumers are spending its sharpest decline for 13 years between july and september 2008

Social The UK has againing popultion which is increasing unemployement

Technology The survey revealed that 34% of the online consumers plan to use price comparisions sites in 2009 (NMA,2009)

Online bookings of BA and also check –in is increasing shown by the industry

Environment

BA is also taking care of the Noise pollution control ,and energy consumption control (DFT,2008)

There is been shortage of land for growing airports . expansion of

Legal

Good employee relations are essential if BA wantsto avoid

industrial action and interruptedoperations

Collusion an price fixing will have an

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airports is now been dificult in Heathrow , which would result in loss in London’s green belt areas (BBC ,news 2006)

impact on BA’s proposed alliances with American Airlines

Globalisation

Definition of globalisation

International Monetary Fund (IMF), globalisation is “the process through whichan increasingly free flow of ideas, people, goods, services and capital leads tothe integration of economies and societies”.

Globalisation is, thus, about much more than the location of production in low wage economies

Fiscals policy Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy .The two main instruments of fiscal policy are government taxation and expenditure.

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Figure : government spending

Public Debt Policy

If The government thinks that deficit financing is not sufficent for fulfilling the wants of the public expences then it can take loan from world bank or also can take loan from pulic by issuing govt.securities and bonds . this will also increse the cost of debt in the form of interest which the government has to pay on the amount on the loan . so theen the government has to make a buddget and then this amount is fixed will be taken as debt . this policy can also use a the technique of fiscal policy for increasing the government tresure.

Govt. Expenditure Policy

There are large number of public expenditure like opening of govt schools , colleges and universities , making of bridges , roads and new railway tracks . In all above projects govt has paid large amount for purchasing and paying wages and salaries all these expenditure are paid after making govt. expenditure policy . Govt. can increase or decrease the amount of public expenditure by changing

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govt. budget . So , govt. expenditure is technique of fiscal policy by using this , govt. use his fund first on very necessary sector and other will be done after this .

Q3.Explain whether the problems facing the British airways can be found in a

planned economic system and discuss whether the economic system in which the

BA operates allocates resources better.

3.a Explain how market structures in practice deviate from the model of perfect competition.

There are many types of market in which there are different buyers and sellers . The prices f a commodity increases are the demand for the commodity increases . so the economist say that there are always substitutes products if a demand for a product increases .

Types of market

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Perfect competition: perfect competition is when there are many people in the market and no one can control the price . The main objective is to earn maximum profit

Monopoly : monopoly is when a single personis doin a business is called monopoly .

Monopsony: It is when there is only one buyer for a product .

Oligopoly : there are few large suppliers whose business decision affect each other .

Characteristics of oligopoly

As BA is a oligopoly market the characteristics are as follows

1) Interdependence : the firms under oligopoly are interdependence in making decisions . this is so because markets are few and they can change the price of the commodity whenever require.

2) Group behaviour : in the case of perfect competition and monopoly firms tend to behave in a way to earn profit. Therefore firms under oligopoly are inter-dependant

3) Price rigidity: Here there is price rigidity . Prices are rigid and stable . if any firm changes their price it will affect all other firms as a competition

3.2 Use a range of examples to illustrate the relationship between market forces and organizational responses

Supply and demand curve

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Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium of price and quantity.

The four basic laws of supply and demand are

1. If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.

2. If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.

3. If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.

4. If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Demand curve

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Demand is when the price of the tickets of BA is stable as compared to other firms the best one is taken into consideration , i.e BA has most of the running short haul flights in UK because of its demand

Supply curve

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Demand and supply curve

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Price elasticity of demand

Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its pricei.e when the price of tickets of BA increases then the demand for the irways will fall down

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3.3Explain the behaviour and competitive strategies employed by an organization and discuss the role of the Competition Commission and regulatory bodies

Competitive rivalry 1)BA’s short haul market is more fragmented with many small players 2)Consolidation of competitors has increased competition

Power of suppliers 1)two aircrafts manufactures = high bargaining power2)BA restricted by sole suppliers of fuel to the airport

Power of buyers 1)low concentration of buyers to suppliers means they have little bargaining power

Threat of new entrants 1)barriers to exit are in place which deters new entrants

2) The failure of recent airlines such as xl and zoom is likely to deter new entrants (times online ,2008)

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Treats of substitutes There are few direct substitutes

1) Short haul flights: the eurostar or a ferry 2) Long haul flights: no notable substitutes

Q4 .State the market in which the British Airways operate and discuss whether it

is easy to merge in that type of market (regulatory environment implication etc)

Competition commission

The competition commission is a non departmental public body responsible for mergers . It is a competition under the department for business , innovation and skills The Competition Commission replaced the Monopolies and Mergers Commission on 1 April 1999. It was created by the Competition Act of 1998, although the majority of its powers are governed by the Enterprise Act 2002.

Mergers

In order to qualify for investigation by the OFT, a merger must meet all three of the following criteria:

1. Two or more enterprises must cease to be distinct;2. The merger must not have taken place already, or must have taken place

not more than four months ago; and3. One of the following must be true:

1) The business being taken over has a turnover in the UK of at least £70 million; or

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2) The combined businesses supply (or acquire) at least 25 per cent of a particular product or service in the UK (or in a substantial part of the UK), and the merger results in an increase in the share of supply or consumption

5. Explain whether the British airways have benefited from international

business/trade and the European Union. What will be the business implication to

the BA, if the UK, joins the European Monetary Union (EMU).

5.1 Discuss the importance of International trade, economic integration and

global markets to UK business organizations.

International trade

International marketing is trade taken place with many countries , here thegoods and services are imported and exported to many countries .internationalmarketing have to pay high tax, and duty .

Total Current Account, 2010 (£billion) Total Credits

Total Debits

Balance

614.867 651.593 -36.726

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Balance of payment

The UK current account has recorded a deficit every year since 1984. The deficit indicates that the UK is not paying its way in the global economy.

Figure5.1 balance of payment

Key features:

Part I: Current Account

1)Summary of Balance in Payment

2)Trade in goods

3)Trade in service

4)Income

5)Current transfers.

Part II: Capital Account, Financial Account and International Investment Position

Part III: Geographical breakdown

1)Geographical breakdown of Current Account

2)Supplementary Information.

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Figure 5.2 tade in services and goods

The above diagram shows the trade in services in good done during the year 1995-2006

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5.2 Analyse the impact of two policies of the European Union on UK business

organizations

Europe union is the economic and political union which has 27 member states

which are located in Europe

The EU operates a system of supranational independence institution and

intergovernmental negotiated decision by the members of states

They have also developed a market named single market through standardised

system of laws which applies in al member states

The two policies are single market and common currency

Single market

Advantages and disadvantages of common currency

Advantages disadvantages

Rival to the “Big two”. The instability of the system

Prevent war Loss of sovereignty

Increase trade and reduce costs to

firm

Deflationary tendencies

The political agenda Over estimation of trade benefits

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5.3 Explain the Economic implications for the UK of entry into EMU

European monetary union

The Economic and Monetary Union (EMU) is an umbrella term for the group of

policies aimed at the converging the economies of members of the European

Union in three stages so as to allow them to adopt a single currency, the euro.

Every European country has to be part and to participate in EMU

The main aspect of the EMU are

1) Economic

2) Monetary policy aspects

Countries wishing to join the single currency must meet four convergence criteria

1) Stable prices : Inflation must not be more than 1.5 percentage points i.e. lowest inflation.

2)Stable exchange rate: The national currency must have been stable for a period of two years

3)Sound government finances : Gross government debt must not exceed 60 per cent of GDP

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4)Low interest rates: The 5-year government bond rate must not be more than 2 percentage points .

Conclusion

The author firstly told about the mission , values and key objective .pestle and

other five forces were applied . then the social welfare and industrial policy

initiatives were discussed and also discussed whether the economic system in

which the BA operates allocates resources . Oliglpoly is used by BA as shown

earlier . The demand supply and elasticity of price was also shown in

consideration with BA . Lastly the author told us the importance between

international trade and Economic implications for the UK of entry into EMU

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